Earlier in 2013 a bill was proposed in the New York State Assembly that would prohibit clauses in construction contracts which require contractors or subcontractors to continue to perform unapproved or disputed work. The bill correctly identifies that such clauses often create problems with non-payment after the unapproved or disputed work is completed. Such clauses are often used to “ram” work down on a contractor that has little defense to the owner’s bargaining power and simply wants to get paid. Unfortunately, often the work is then deemed to be “scope work” or, for some other reason, is deemed to not justify an increase in the contract price. Because the work has already been completed, the contractor or subcontractor is left without any leverage in negotiations. A memo attached to the proposed bill noted that “the bill will also provide an incentive for owners to settle disputes and process change orders.”
While the bill passed the Senate in May 2013, it has stalled out in the Assembly where it was referred to the Judiciary Committee and has remained since May. Hopefully the Assemble acts on this important piece of legislation before the session ends but that seems unlikely at this point.